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Legal  Phases 

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LEGAL  PHASES  OF  THE  SHANTUNG  QUESTION 


By 

Harold  Scott  Quigley 

Assistant  Professor  of  Political  Science 
University  of  Minnesota 


Reprinted  from 

Minnesota  Law  Review 

April,  1912 

minneapolis.  minn. 


oza^ 


Copyright  by 

Minnesota   Law   Review 

1922 


4-  n^ 


LEGAL  PHASES  OF  THE  SHANTUNG  QUESTION 
By  Harold  Scott  Qvigley* 


T 


HE  Versailles  Peace  Conference  awarded  the  German  ri<^hts, 
title  and   privileges  in  Shantung   Province  to  Japan.'     This 
award  was  the  climax  of  nearly  five  years  of  military  and  diplo- 
matic efifort  through  which  Japan  had  captured  Tsingtao,  taken 
possession  of  the  German  and  Sino-German  properties,  both  pub- 
^  lie   and    private,    throughout    Shantung,    and    made    "gentlemen's 

^  agreements"  with  Great  Britain,  France,  Russia  and  Italy,  recog- 

"^  nizing  her   right  to  retain   what   she  had  won.'     To  this  award 

China  refused  to  become  a  signatory,  resting  her  refusal  upon 
legal  and  ethical  grounds.^     To  examine  the  former,  some  phases 
of   which  have   received   scant  attention,   is   the   purpose   of   this 
>^^  article. 

N^  The  legal  argument  of  the  Chinese  Government  for  the  direct 

'^  restitution  of  the  leased  territory  of  Kiaochao,  together  with  the 

railway  and  mining  rights  which  Germany  possessed  in  Shantung 
before  the  war,  advanced  one  principal  and  two  secondary  points. 
If  this  presentation  of  alternatives  is  prejudicial  to  China's  case 
the  ambiguity  of  international  law  as  applied  to  certain  elements 
of  the  problem  justly  counterbalances  prejudice.  Even  in  courts 
of  municipal  law,  furthermore,  the  parties  are  reluctant  to  rest  a 
case  upon  a  single  legal  principle  or  line  of  reasoning. 

The  principal  legal  jiroposition  \)n\.  forward  by  Mr.  Lu 
Clieng-hsiang  and  his  associates  at  Versailles  and  maintained  con- 
sistently by  the  Chinese  Government  since,  is  that,  in  consequence 
of  China's  declaration  of  war  on  the  Central  Powers  and  accom- 
panying declaration  of  abrogation  concerning  "  agreements  and 
conventions  heretofore  concluded  between  China  and  Germany, 
and  between  China  and  xAustria-Hungary.  as  well  as  such  parts 
of    the   international    protocols   and    international    agreemen.ts   as 

*Assistant  Professor  of  Political  Science,  University  of  Minnesota. 
This  article  was  written  at  Tsing  Hiia  College.  Peking.  China,  while  on 
leave  of  absence. — Ed. 

'Treaty  of  Peace,  Articles  156,  157,  158. 

'2  MacMurray,  J.  \'.  A.,  Treaties  and  Agreements  with  and  concern- 
ing China,  1894-1919,  1919-21,  1488.  Also  in  China  Year  Book.  10JI-2. 
707-71 T. 

^China  Year  Book,   1921-2,  711-713. 


381  MIXXESOTA    LAW   REVIFAV 

concern  only  the  relations  between  China  and  Germany  and  be- 
tween China  and  Austria-Hungary,'"  the  lease  convention  of 
1898  under  which  Germany  had  administered  Kiaochao  and  en- 
joyed other  specified  privileges  had  been  abrogated/  Anticipatory 
of  the  necessity  of  meeting  the  argument  that  in  ratifying  in  1915 
a  treaty  with  Japan  by  which  "the  Chinese  Government  agrees 
to  give  full  assent  to  all  matters  upon  which  the  Japanese  Gov- 
ernment may  hereafter  agree  with  the  German  Government  relat- 
mg  to,  the  disposition  of  all  riglits.  interests  and  concessions  which 
Germany,  by  virtue  of  treaties  or  otherwise,  possesses  in  relation 
to  the  Province  of  Shantung,""  China's  argument  distinguishes  the 
position  of  China  after  her  declaration  from  that  which  she  occu- 
pied at  the  time  the  Sino-Japanese  treaty  of  May  25,  1915  was 
concluded.  At  the  latter  date  China  was  neutral  and  her  ratifica- 
tion was  "clearly  subject  ...  to  the  implied  condition  that 
China  remained  neutral  throughout  the  war,  and  therefore,  would 
be  unable  to  participate  in  the  final  Peace  Conference  .  .  ." 
China's  entry  into  the  war  so  vitally  changed  the  situation  con- 
templated in  the  treaty,  that,  on  the  principle  of  rebus  sic  stantibus, 
it  ceases  to  be  applicable.' 

Regarding  this  argument  as  sound  the  Chinese  Government 
nevertheless  included  in  its  brief  two  alternative  propositions; 
both  of  these  contemplate  the  contention  that  the  abrogation  de- 
claration was  ineffective  against  a  prior  treaty  guaranteeing  that  of 
which  the  abrogation  would  operate  as  a  deprivation;  tlie  first 
sets  up  the  alternative  that  the  treaty  was  void  ab  initio  because 
imposed  with  force  majeure ;"  the  second  alleges  the  incompetency 
of  Germany  to  transfer  the  leased  territory  to  a  third  power."  This 
allegation  is  based  upon  the  fifth  article  of  section  1,  Lease  of 
Kiaochao,  by  which  "Germany  engages  at  no  time  to  sublet  the 
territory  leased  from  China  to  another  Power."" 

Since  the  Chinese  Government  has  relied  rather  upon  the 
former  than  the  two  latter  lines  of  argument,  the  latter  will  be 
dealt  with  first.     That  which  rests  the  incompetency  of  the  Sino- 

■"Ministry  of  Foreign  Affairs,  Official  Documents  relating  to  War 
(for   1917),   14. 

•'China  Year  Book,   1921-2,  667-8. 

"Same,  667. 

'China  Year   Book,    1921-2,   667. 

"Chinese  White  Book,  cited  in  10  New  York  Times  Current  History 
^facazine,  ii,  550. 

'■'China  Year  Book,  ig2i-2,  667-8. 

'"•Same,  669. 


^ 


LEGAL  PHASES  OF  THE  SHANTUNG  QUESTION        382 

Japanese  treaty  of  1915  upon  Japan's  use  of  force  majeure  appears 
to  be  without  adequate  basis  in  international  law.  No  statement 
could  be  clearer  than  the  following  from  a  recent  revision  of 
Oppenheim's  treatise :  "It  must,  however,  be  understood  that  cir- 
cumstances of  urgent  distress,  such  as  either  defeat  in  war,  or 
the  menace  of  a  strong  state  to  a  weak  state,  are,  according  to 
the  rules  of  international  law,  not  regarded  as  excluding  the 
freedom  of  action  of  a  party  consenting  to  the  terms  of  a  treaty. 
The  phrase  'freedom  of  action'  applies  only  to  the  representatives 
of  the  contracting  states.""  John  Bassett  Moore  points  out  that : 
"Coercion,  while  invalidating  a  contract  produced  by  it,  does  not 
^  invalidate  a  treaty  so  produced.'"'    He  also  quotes  Bernard  to  the 

K  same  eft'ect :     "It  is  commonly  laid  down  that  neither  the  plea  of 

duress  nor  that  of  laesio  enormis,  [a  degree  of  hardship,  that  is, 
so  plain  and  gross  that  the  sufferer  cannot  be  supposed  to  have 
contemplated     what     he     was     undertaking] — pleas     recognized, 
A  directly  or  circuitously,  in  one  form  or  another,  by  municipal  law 

^  both  ancient  and  modern,  can  be  allowed  to  justify  the  nonfulfil- 
ment  of  a  treaty.'"'  Vattel  takes  the  same  view :  "On  ne  pent  se 
degager  d'un  traite  de  paix  en  alleguant  qu'il  a  ete  extorque  par 
la  craiu'te  ou  arrache  de  force.""  Phillipson,  writing  in  1916, 
qualifies  his  statement  of  the  law :  "In  the  case  of  conventions 
established  during  peaceful  relationships,  duress  may  generally 
be  deemed  a  ground  for  repudiation ;  but  in  a  treaty  of  peace, 
force  and  compulsion  cannot  be  so  held.'"'  He  does  not,  however, 
cite  any  cases  in  support  of  this  distinction.  Hall  attaches  to 
his  general  statement  that  international  law  "regards  all  com- 
pacts as  valid,  notwithstanding  the  use  of  force  and  intimidation" 
the  condition  that  these  compacts  "do  not  destroy  the  independ- 
ence of  the  State  which  has  been  obliged  to  enter  into  them.'"" 
Westlake  and  Lawrence  do  not  qualify  the  rule.''  The  practical 
unanimity  of  these  authorities  is  sufficient  warrant  for  rejecting 
the  argument  from  force  majeiu'e  on  legal,  however  strong  it 
may  be  on  moral,  grounds. 

"i  International  Law.  3rd  ed.,  66o. 
''5  International  Law  Digest,  183. 

"Lectures  on   Diplomacy,   184;  quoted  in  1.   L.   D.   \'.    184. 
'^Droit  des  gens,  liv.   IV,  chap,   iv.,  sec.  2)7- 

'■'Phillipson,  Coleman,  Termination  of  \\'ar  and  Treaties  of  Peace,  162. 
'"International  Law,  6th  cd.,  319. 

"i   Westlake   International   Law  290;   Lawrence   Principles  of  Intei-na- 
tional  Law,  6th  ed.,  327. 


"OV 


383  ■  Ml  .V-\"  I -SO  TA    LAl\-    RIA'ir.W 

The  second  alternative  proposition  advanced  l)y  the  Chinese 
Government  is  that  German}'  was  estopped  from  the  transfer  of 
her  lease  to  Japan  by  a  term  of  the  lease  itself."  This  provision 
is  peculiar  to  the  Kiaochao  lease;  those  of  Port  Arthur,  Wei- 
Hai-Wei,  Kowloon  and  Kuang-Chow-Wan  have  no  explicit 
statement ;  an  argument  that  the  latter  are  non-transferable  may, 
however,  be  made  on  the  basis  of  the  general  nature  of  such 
leases.  Involving,  as  they  do,  a  temporary  grant  of  administrative 
jurisdiction  as  well  as  the  possession  of  territory,  the  consent  of 
the  transferor  has  been  "overborne  by  superior  force,  and  the 
argument  is  concluded  under  duress  ...  If  the  lessor  is  un- 
willing, though  he  is  by  force  of  circumstances  constrained,  to 
make  the  conveyance,  it  is  inconceivable  that  he  should  consefit 
to  its  transfer  to  a  third  party.'""  It  is  difficult  to  see  the  logic  of 
Dr.  Tyau's  inference;  if  a  forced  lease  is  legal  ab  initio,  its  legality 
would  appear  to  be  unaffected  by  a  continuance  of  the  application 
of  force  majeure  such  as  a  transfer  of  lease  would  imply.  In 
1905,  it  is  true,  Russia  transferred  the  Liaotung  ])eninsula  to 
Japan  "with  the  consent  of  the  Government  of  China"  but  that 
the  consent  was  ex  post  facto  is  revealed  by  the  paragrajih  fol- 
lowing that  of  the  transfer,  in  which  "the  two  High  Contracting 
Parties  mutually  engage  to  obtain  the  consent  of  the  Chinese 
Government  mentioned  in  the  foregoing  stipulation.'""  The  con- 
sent, given  by  that  government  in  the  Komura  treaty,  was  given 
under  duress  and  to  the  transferee,  not  the  transferor."  The  two 
treaties  of  transfer,  like  the  original  treaty  of  lease,  recognize 
the  ultimate  sovereignty  of  China  over  the  leased  area.  In  neither 
situation  does  there  appear  to  be  apprehension  that  such  recogni- 
tion would  operate  against  transfer. 

Where,  however,  ati  express  agreement  not  to  transfer  has 
been  incorporated  in  the  treaty  of  lease,  the  issue  becomes  two- 
fold. That  Germany  was  bound  not  to  make  a  voluntary  assign- 
ment of  Kiaochao  is  evident;  to  that  extent  the  special  stipula- 
tion was  of  importance  since  it  guaranteed  the  Chinese  Govern- 
ment against  any  exchange  which  Germany  might  regard  as  ad- 

^*"German3'  engages  at  no  time  to  sublet  the  territory  leased  from 
China  to  another  Power."     Art.  5,  sec.   2;   I  MacMin-ray   1898-4  114. 

'''Tj-au,  Treaty  Obligations  between  China  and  other  States,  69. 

'"Treaty  of  Portsmouth,  Art.  V.  ;  i  Maclfurray.  1905-8,  523.  Also 
in  Takahashi,  International  Law  applied  to  the  Russo-Japanese  War, 
Ap))endix    IV. 

"'i   MacAIurray,   1905-18,   550. 


LEGAL  PHASES  OF  THE  SHANTUNG  QUESTION    '  3'84 

vantageous.  The  i)robability  of  such  vohintary  transfer  was,  how- 
ever, extremely  remote.  On  the  other  hand  there  was  the  pos- 
sibiHty,  later  to  become  reality,  that  Germany  would  be  com- 
pelled by  force  majeure  to  surrender  her  lease  to  another  Power. 
\n  that  contingency  the  obligation  of  Germany  would  be  dissolved 
under  the  doctrine  of  rebus  sic  stantibus"  or  become  void  through 
impossibility  of  performance."  Since  the  transfer  of  the  Kiaochao 
lease  took  place  under  conditions  of  force  majeure,  the  necessary 
reply  to  the  second  alternative  proposition  of  the  Chinese  Govern- 
ment is  a  denial  of  its  legal  effectiveness. 

Throughout  the  argument  upon  this  proposition  the  word 
"transfer"  has  been  used  as  equivalent  to  the  German  words 
"weiter  verpachten"  which  are  properly  translated  "sublet"  in 
English  texts  of  the  treaty.''  The  broader  words  "jang,"  "chiian 
jang,"  and  " cJiuan ,''''  all  meaning  transfer,  have  been  used  inter- 
changeably with  the  narrower  word  "cliuan  ch'u,"  which  appears 
in  the  Chinese  text  of  the  original  lease,"*  by  the  spokesmen  of 
the  Chinese  Government  at  the  Peace  Conference  and  subse- 
quently. To  this  wider  interpretation  of  the  terms  of  Article  V 
the  Japanese  Government  appears  to  have  taken  no  exception. 
To  sublet  is  to  set  up  a  relationship  between  the  lessee  and  a  new 
tenant,  clearly  a  different  proceeding  from  that  involved  in  the 
Japanese  conquest  of  Kiaochao.  The  translation  "sublet,"  there- 
fore, would  be  still  less  advantageous  to  the  argument  of  the 
Chinese  Government  than  that  of  "transfer"  though  it  may  be 
argued  that  an  agreement  not  to  sul)let  would  imply  the  obliga- 
tion to  refrain  from  transfer. 

The  principal  legal  proposition  advanced  by  China  does  not 
depend  upon  either  of  the  propositions  discussed  above.  It  rests 
upon  the  "general  rule  that  war  abrogates  the  treaties  existing 
between  the  belligerents  .  .  .""  In  accordance  with  this  prin- 
ciple, in  declaring  a  state  of  war  to  exist  between  China  and  the  two 

"See  I  Oppenheim  688-693:  i  Wcstlake  293-297;  Foster,  Practice  of 
Diplomacy  299-300. 

"l    Oppenheim  694. 

"^Deutschland  verpflichtct  sicli,  das  von  China  gepachtete  Gehiet 
niemals  an  eine  andere  Alacht  weiter  zu  verpachten."  Second  paragraph 
of  Article  V..  "Convention  for  the  Lease  of  Kiaochow.  1898;"  in  Treaties. 
Conventions,  etc.  between  China  and  Foreign  States,  3  Imperial  Maritime 
Customs,  30  Aliscellaneous  Series  II,  946. 

"^Memorandum  concerning  Shantung  (prepared  for  the  use  of  the 
Chinese  delegates  to  the  Peace  Conference)  4,  15. 

■"Customs,  Treaties,  etc.  947. 

"2  Westlake  32. 


385  MINNESOTA    LAW   RFAIEW 

principal  Central  Powers,  the  Chinese  Government  declared  the 
consequent  abrogation  of  its  treaties  and  other  agreements  with 
them.  At  Versailles  and  in  the  recent  interchange  of  corre- 
spondence with  Japan,  the  position  of  China  has  been  that  the 
"lease  of  Kiaochao  Bay  expired  immediately  on  China's  declara- 
tion of  war  with  Germany."'" 

To  the  general  rule  that  war  abrogates  all  inter-belligerent 
treaties  international  law  admits  exceptions.  Arrangements  to 
regulate  war,  transitory  or  dispositive  treaties,  and  conventions 
including  signatory  third  powers  are  the  exceptions  usually  recog- 
nized."" Whether  the  treaty  for  the  lease  of  Kiaochao  is  to  be 
included  under  the  general  rule  or  mider  an  exception  depends 
upon  the  nature  of  the  lease. 

The  leases  of  territory  which  have  been  embodied  in  conven- 
tions are  of  two  principal  types,  the  lease  in  perpetuity  and  the 
lease  for  a  term  of  years.  In  the  first  category  are  the  lease  of 
the  Panama  Canal  Zone  held  by  the  United  States,^"  the  lease  by 
the  Sultan  of  Zanzibar  of  his  mainland  ])ossessions  to  the  British 
East  Africa  Company,  made  perpetual  in  1891  and  later  annexed 
to  the  Crown,^'  and  the  leases  of  "concessions"  for  foreign  settle- 
ment at  Tientsin,  Hankow,  Kiukiang,  Newchwang,  Canton  and 
other  Chinese  ports ;'"  in  the  second  the  group  of  leases  secured 
by  four  of  the  powers  from  China  in  1898,  in  each  of  which  a 
term  of  years  was  specified.''  Agreement  is  unanimous  that  the 
lease  in  perpetuity  is  equivalent  to  cession.  The  rescission  of  the 
German  concessions  at  Hankow  and  Tientsin  and  the  Austro- 
Hungarian  concession  at  Tientsin,  which  resulted  from  the  Great 
War,  was  not  a  product  of  the  declaration  of  abrogation  but  of 
the  defeat  of  Germany.  There  is  excellent  authority  to  support 
the  contention  that  leases  for  a  term  of  years  are  "disguised" 
cessions.  Writers  who  take  this  view  make  no  distinction  between 
leases  in  perpetuity  and  leases  for  a  term  of  years  and  none  on 
the  basis  of  length  of  term.  They  regard  the  reservation  of 
sovereignty,  express  or  implied,  as  a  disguise  for  a  situation 
amounting  to  annexation  and  contemplated  as  leading  to  annexa- 

■"'Chincsc  Alemorandum  to  Japan,"  Oct.   5,   1921,  Peking-  and  Tientsin 
Times,  Oct.  7,  1921. 

-"2  Westlake  32-34;  2  Oppenheim,  2nd  ed,   129-131  ;   Lawrence  360-365. 

'"Malloy's  Treaties. 

"i  Westlake-  135. 

''Morse.  Trade  Administration  of  China,   Chap.  VIII. 

''i    AlacMurray    (Liaotung)    1898-5,    119-121;    (Wei-Hai-W'ei)    1898-14 


LEGAL  PHASES  OE   l  J I E  SILIXTUXG  QUESTION       386 

tion.  It  is  somewhat  surprising  that  this  view  is  frequent  in  the 
French  treatises  since  the  French  school  of  international  law  is 
notahle  rather  for  its  emphasis  upon  the  letter  of  the  law  than  the 
practice  which  often  evades  it.  Among  others  Ernest  Nys,"  A. 
Rivier,^'  Perrinjaquet/"  and  Louis  Gerard^'  may  be  cited  as  lib- 
eral constructionists  upon  the  issue  in  question.  Lawrence,** 
Westlake,'"  who  quotes  Despagnet,  and,  following  him,  Pitt-Cob- 
bett'"  also  emphasize  the  "disguise"  to  be  detected  in  what  purport 
to  be  leases  for  a  term  of  years  only.  Hershey  classifies  the  lease 
for  a  term  of  3'ears  as  a  "disguised  or  indirect"  cession.'' 

The  qualifying  terms,  such  as  "unlikely,"  "practical,"  "matter 
of  fact,"  etc.,  which  modify  the  views  of  these  writers  indicate 
their  hesitation  to  su])port  the  establishment  of  a  principle  by 
reading  between  the  lines  when  the  lines  of  the  lease  themselves 
clearly  favor  the  lessor  state  by  the  reservation  of  sovereignty 
during  the  existence  of  the  lease  and  by  prescribing  a  definite 
duration  of  its  existence  : 

"His  Majesty  the  Emperor  of  China  .  .  .  engages,  while  re- 
serving to  himself  all  rights  of  sovereignty  in  a  zone  of  50  kilo- 
metres (100  Chinese  li)  surrounding  the  Bay  of  Kiaochow  at 
high  water  ..."     His  Majesty  the  Emperor  of  China  leases  to 

152-3;    (Kiaochao)    1898-4,    112-116;    (Kwangchouwan)    1898-7,    124. 

^*"L'acquisition  du  territoire  el  le  droit  international,"  in  Revue  de 
Droit  International  36,   1004,  376. 

*^'l  Principles  du  Droit  des  gens   180. 

^Revue   gencrale  de   Droit   international  public   16,   1909,  349-367. 

^'Des  cessions  deguises  de  territoires  en  Droit  international  public 
286. 

''Principles  176-177. 

='i,   135-136. 

^"i  Leading  Cases  110. 

"Essentials  of  International  Public  Law  184. 

^"Article  i  ;  The  respective  German  and  Chinese  words  used  in  this 
sentence  are  rechte  der  Souveriinitat  and  chu  chiian,  both  meaning  sover- 
eignt}';  in  article  III.  (II.  946)  where  some  English  translations,  e.  g. 
that  used  by  Professor  Hershey  in  13  American  Journal  of  International 
Law  533,  read,  "in  virtue  of  rights  of  sovereignty  over  the  whole  of  the 
water  area  of  the  bay  .  .  .,"  while  others  read  rights  of  administration, 
the  respective  German  and  Chinese  words  are  hoheitsrechte  and  kuan 
shih,  meaning  respectively  rights  of  sovereignty  and  rights  of  adminis- 
tration. From  the  Chinese  point  of  view  no  distinction  was  intended 
between  the  status  of  the  water  area  and  the  land  area  involved  in  the 
lease ;  over  both  China's  sovereignty  was  reserved.  The  official  an- 
nouncement of  the  German  Government  made  no  distinction  between 
the  status  of  the  land  and  the  water  area :  "the  Imperial  Chinese  Gov- 
ernment has  transferred  to  the  German  Government,  for  the  period  of 
the  lease,  all  its  sovereign  rights  in  the  territory  in  question."  ( i  West- 
lake  136).  Since  this  statement  recognizes  that  the  lease  is  for  a  period 
of  years  it  recognizes  by  inference  the  reservation  of  China's  sovereignty; 
hence   the  terms  rights   of    so\erci!int\'   and   rights   of   administration   are 


387  MLWxnsoTA  L/ur  rejiew 

Germany,  provisionally  for  ninety-nine  years,  both  sides  of  the 
entrance  to  the  Bay  of  Kiaochow."" 

Westlake  recognizes  that  "when  properly  is  leased,  the  lessor  re- 
tains a  proprietary  right  which  runs  concurrently  with  the  lessee's 
right  of  enjoyment.  If  therefore  the  analogy  were  closely 
pressed,  the  state  which  grants  a  lease  of  territory  would  be  held 
to  retain  all  the  time  some  sort  of  sovereignty  over  it."*'  Pitt- 
Cobbett  prefaces  the  conclusion  stated  above  with  premises  that 
hardly  lead  him  logically  to  his  conclusion  : 

"As  to  the  effect  of  such  international  leases,  it  would  seem 
strictly  that,  whilst  conferring  rights  of  user  and  enjoyment  on 
the  lessee,  yet  the  territory  remains  subject  to  the  sovereignty  of 
the  lessor,  and  subject  also  to  any  prior  o])ligations  specifically 
attached  thereto.  The  reservation  of  sovereignty,  moreover,  miglit 
also  be  said  to  imply  the  obligation  on  the  part  of  the  lessee  not  to 
use  the  territory  to  the  prejudice  of  the  lessor."'' 

Oppenheim  points  out  that  while  "such  cases  comprise,  for  all 
practical  purposes,  cessions  of  pieces  of  territory  ...  in  strict  law 
they  remain  the  property  of  the  leasing  state.'""  His  position  is 
directly  contradictory  to  that  taken  by  writers  cited  above: 
"And  such  property  is  not  a  mere  fiction,  as  some  writers  main- 
tain, for  it  is  possible  for  the  lease  to  come  to  an  end  by  expira- 
tion of  time  or  by  rescission.  Thus  the  lease  of  the  so-called  Lado 
Enclave,  granted  in  1894  by  Great  Britain  to  the  former  Congo 
Free  State,  [which  an  anonymous  writer  in  I,  R.  G.  D.  I.  P.,  380, 
cited  by  Westlake,  I,  136  ,  n.  1,  declared  to  be  'not  a  true  letting 
but  an  alienation']  was  rescinded  in  1906.'"' 

Hall  takes  an  even  more  definite  stand  for  strict  interpretation : 
"These  and  such  like  privileges  or  disabilities  are  the  creatures, 
not  of  law,  but  of  compact  .  .  .  They  conform  to  the  universal 
rule  applicable  to  jura  in  re  aliena.  Whether  they  be  customary 
or  contractual  in  their  origin,  they  must  be  construed  strictly 
n,  therefore,  a  dispute  occurs  between  a  territorial  sovereign  and 
a  foreign  power  as  to  the  extent  or  nature  of  rights  enjoyed  by 
the  latter  within  the  territory  of  the  former,  the  presumption  is 
against  the  foreign  state,  and  upon  it  lies  the  burden  of  proving 
its  claim  beyond  doubt  or  question.'"' 
The   Naval   War   College  concluded   that:   "the  general   position 

practically  identical.  See  2  Customs,  Treaties,  etc.,  944,  also  i  MacAIur- 
ray,  1898-4  113. 

"Article  II. 

""I,  135-136. 

^i  Leading  Cases  no. 

"I,  310. 

^'Same. 

■""International  Law  158-159. 


L/-GAL  J'HASRS  Ol    I  111:  SHANTUNG  QUESTION       388 

assumed  Ijy  the  powers  is  not  that  sovereignty  has  passed,  but 
that  the  jurisdiction  to  the  extent  named  in  the  treaty  of  cession 
has  passed  to  the  leasing  power.'"'  John  Bassett  Moore  does 
not  achnit  poHtical  considerations  into  the  interpretation  of  a 
lease.  In  a  letter  responding  to  an  inquiry  from  a  friend  of  the 
writer  he  wrote  : 

"The  English  versions  that  have  been  published  .  .  .  are  not  ac- 
curate. They  are  even  more  favorable  to  Germany  than  the  Ger- 
man text  of  the  agreement,  while  the  Chinese  text  is  distinctly 
less  favorable  to  Germany  than  is  the  German  text  .  .  .  From 
this  it  is  easy  to  infer  that,  in  the  case  of  those  who  have  sought 
to  treat  the  Chinese  leases  as  'disguised  cessions,'  the  wish  has 
been  father  to  the  thought.  Personally  I  am  not  inclined  to  ac- 
cord to  governments,  any  more  than  to  individuals,  the  benefit  of 
the  doubt  in  the  interpretation  of  instruments  the  acceptance  of 
which  they  impose  upon  others  by  force.'"" 

As  would  be  anticipated,  Chinese  writers  are  strict  construction- 
ists. M.  T.  Z.  Tyau  regards  the  leases  granted  by  China  as  "a 
species  of  international  servitudes"  to  be  "construed  strictly 
against  the  Ijeneficiary  states.'"'  \\'en  Sze  King  takes  the  same 
view."' 

From  the  foregoing  summary  of  opinion  regarding  the  na- 
ture of  the  leases  of  which  that  of  Kiaochao  is  typical,  the  neces- 
sary conclusion  from  the  legal  standpoint  is  that  they  are  what 
they  are  entitled,  leases  for  a  definite  term  of  years,  to  be  sur- 
rendered at  the  expiration  of  the  term.  Thus  the  Sino-German 
lease  treaty  of  1898  was  not  a  pactum  transitorium,  setting  up  a 
permanent  state  of  things  such  as  would  be  done  by~a  peace  treaty 
in  determining  a  boundary.  Since  there  can  be  no  argument  that 
it  belonged  to  either  of  the  other  excepted  categories  it  fell  neces- 
sarily within  one  of  those  susceptible  of  abrogation  by  war  or  by 
declaration  upon  the  outbreak  of  war.  In  view  of  its  clauses  pro- 
viding for  administrative  powers,  the  better  conclusion  would 
seem  to  be  that  it  was  a  political  treaty  not  contemplated  as  es- 
tablishing a  permanent  condition  of  things. 

The  question  now  arises  :  did  China  forfeit  her  right  of  abro- 

^'Naval  War  College  1902,  p.  ^2- 

"■"Letter  of  Afar.  25,  1921. 

''Treaty  Obliftations  68. 

'^""The  Lease  Conventions  lictween  China  and  the  Foreign  Powers," 
in  I  Chinese  Social  and  PoHtical  Science  Review,  25-26.  He  quotes 
Bluntschli.  Lc  Droit  international  20Q.  1  Phillimore  International  Law 
391,  and  Wilson,  International  Law  133.  in  support  of  strict  construc- 
tion of   international  servitudes. 


389  MINNESOTA    LAW   REVIEW 

gation  by  consenting  to  the  Shantung  clauses  of  the  Twenty  One 
Demands  quoted  above?  As  ah-eady  stated  China's  argument 
invokes  the  principle  of  rebus  sic  stantibus.  The  status  of  a  co- 
belligerent  and  participant  in  the  peace  treaty,  she  has  contended, 
is  vitally  different  from  that  of  a  neutral.  As  a  neutral  she  had 
no  right  to  abrogate  treaties  and  as  such  she  submitted  to  the 
Japanese  ultimatum.  It  would  hardly  be  argued  that  the  ultima- 
tum would  have  been  served  upon  China  had  she  been  associated 
with  the  Allies  at  that  time.  In  logic,  the  difference  in  her  cir- 
cumstances upon  becoming  a  belligerent  was  entitled  to  the  same 
respect  as  it  would  have  received  two  years  previously ;  a  vital 
difference  in  1915,  it  was  equally  so  in  1917.  In  view  of  all  the 
circumstances  her  argument  is  sound." 

It  might  have  been  argued  by  the  Chinese  Government  that 
the  word  "possesses,"  used  in  the  first  article  of  the  1915  treaty 
with  Japan,  was  contemplated  as  to  become  applicable  at  the  date 
when  China  actually  was  to  "give  full  assent,"  i.  e.,  at  the  date  of 
the  treaty  of  peace.  Until  then,  Japan's  title  could  be  one  of 
conquest  only.  If,  in  the  meantime,  Germany's  possessions  in 
Shantung  province  should  be  brought  under  the  title  of  China, 
the  "rights,  interests  and  concessions  which  Germany,  by  virtue 
of  treaties  or  otherwise,  possesses  in  relation  to  the  Province  of 
Shantung"  would  be  nil.  Hence  there  would  be  nothing  for  the 
German  Government  to  transfer  to  Japan  and  nothing  for  China 
to  agree  to.  Under  this  interpretation  the  question  of  the  es- 
toppel of  the  right  of  abrogation  would  not  arise. 

China  did  not  request  Japan  to  release  her  from  the  Shan- 
tung agreement,  nor  did  she  declare  herself  no  longer  bound  by 
it.  In  her  mind,  release  from  that  engagement  was  implied  in  the 
declaration  of  abrogation  of  German  privileges  in  Shantung 
which  accompanied  her  declaration  of  war.  By  that  declaration 
China   resumed  the   leasehold   and   other   concessions,   subject   to 

^Wccording  to  Dr.  Ferguson's  testimony,  quoted  by  Willoughby, 
Foreign  Rights  and  Interests  in  China  392,  n.  13,  in  reaching  her  con- 
chision  in  China  "took  the  advice  of  two  eminent  French  international 
lawyers,  of  the  most  eminent  Russian  jurist  who  was  known  to  the 
President  of  the  Board  of  Foreign  Affairs,  who  formerly  had  been  Min- 
ister in  St.  Petersburg;  of  an  eminent  Dutch  jurist  of  Holland  and  of 
an  eminent  international  jurist  from  Belgium,  and  based  her  claim  on 
the  advice  Which  was  given  her  by  the  jurists,  that  is,  that  her  declara- 
tion of  war  against  Germanj^  notwithstanding  her  contract  which  had 
already  been  made  in  1915  with  Japan,  of  itself  vitiated  not  only  the 
German  lease  but  also  the  treaty  with  Japan."  Dr.  Ferguson  pt^ted 
that  this  was  the  unanimous  opinion  of  these  jurists 


LEGAL  PHASES  OF  TEIE  SHANTUNG  QUESTION       390 

such  private  claims  as  international  law  would  allow.  Her  re- 
sumption did  not  wait  upon  the  peace  conference  but  was  legally 
complete  immediately.  Thereupon  Japanese  possession  should 
have  come  to  an  end."' 

The  Chinese  Government  has  not  questioned  the  legality  of 
Japan's  conquest  of  the  leased  territory,  though,  as  above  noted, 
it  has  denied  the  validity  of  the  transfer  by  Germany;  its  claims 
of  violated  neutrality  have  been  concerned  with  the  use  of 
Chinese  territory  not  under  lease.  In  1904  Secretary  Hay,  after 
consulting  with  the  representatives  of  other  interested  powers, 
requested  Russia  and  Japan  to  respect  the  neutrality  of  China. 
His  note  suggested  that. this  could  be  done  by  localizing  and  limit- 
ing the  area  of  hostilities  as  much  as  possible.  Both  the  belliger- 
ents acquiesced  in  this  policy,  with  the  explicit  reservation  by 
Japan,  of  "the  regions  occupied  by  Russia"  and  by  Russia,  of 
Alanchuria ;  the  United  States  accepted  both  constructions  of 
neutraUty  as  satisfactory."  The  Japanese  limitation,  narrower 
than  the  Russian,  was  put  into  force  by  the  Chinese  Government, 
which  made  no  protest  against  the  use  of  the  Liaotung  penin- 
sula, east  of  the  Liao  river,  as  an  area  of  war;  inter  alia  Prince 
Ch'ing  wrote  thus  to  JMinister  Conger : 

"But  at  such  places  in  Manchuria  as  are  still  in  charge  of  a 
foreign  power  and  from  which  its  troops  have  not  yet  withdrawn, 
Giina's  strength  is  insufficient,  and  it  will  be  perhaps  difficult  to 
strictly  observe  the  laws  of  neutrality  there.'"" 
Lawrence  concluded  that  "the  experience  of  the  Russo-Japanese 
struggle  of  1904-1905  shows  conclusively  that  for  all  purposes  of 
war  and  neutrality  leased  territory  must  be  regarded  as  a  part  of 
the  dominion  of  the  power  that  exercises  full  control  over  it."" 
During  the  joint  attack  of  the  Japanese  and  British  forces  upon 
Tsingtao  the  Chinese  Government  was  concerned,  not  with  pro- 
testing against  the  carrying  of  ^var  into  a  leased  territory,  nor 
even  against  the  use  of  adjacent  territory  for  the  movement  of 
Japanese  troops,  but  with  the  delimitation  of  a  military  zone  ex- 
tending about  100  miles  west  of  Tsingtao,  beyond  which  she 
would  maintain  neutrality.'^    When  the  German  Government  pro- 

^\Tapan    raised    no    protest    against    the    abrogation    declaration    until 
the  peace  conference. 

"■"'Foreign  Relations  of  the  United  States,  1904,  2-3. 

""Same  121-2. 

'^'Principles   176-7. 

■'"Declaration  of  Sept.  3   (3),   1014;  in  riiina    Year    Book,    1021-J.    (t(i2. 


391  MIXNESOTA    LAW    REl'IEW 

tested  against  the  military  zone,  China  rephed  that  while  desirous 
of  preventing  belligerent  operations  upon  her  territory,  she  had 
been  unable  to  do  so  and  refused  to  be  held  responsible  for  the 
enforcement  of  strict  neutrality  within  the  zone."°  Logically 
there  seems  to  be  no  reason  for  denying  to  a  belligerent  the  right 
to  attack  the  possessions  as  well  as  the  property  of  his  enemy, 
nor  is  tlie  failure  to  deny  the  right  an  admission  that  a  lease  is 
merely  a  cession  in  disguise,  since  the  restrictions  upon  the  for- 
mer tenant  continue  upon  the  new.  The  consideration  shown  to 
the  lessor  is  indeed  cavalier  but  no  less  so  than  at  the  original  de- 
mand for  the  lease.  As  stated  by  Prince  Ch'ing  in  1904:  "No 
matter  which  of  the  two  powers  may  be  victorious  or  defeated 
the  sovereignty  of  the  frontier  territory  of  Manchuria  will  still 
revert  to  China  as  an  independent  government."""  China  held 
the  same  \iew  regarding  Kiaochao  in  1914. 

This  argument  does  not  resolve  the  question  whether  la])an 
was  legally  capable  of  occupying  the  Shantung  Railway  through- 
out its  length.  Since  China  is  her  own  sole  guarantor  of  neutral- 
ity, Japan's  right  to  disregard  her  proclamation  of  neutrality  is 
clear,  provided  that  no  arrangement  had  been  made,  as  in  the 
Russo-Japanese  War,  to  respect  it.  No  such  arrangement  has 
been  published  though  the  Chinese  Government  has  asserted  that 
an  "understanding"  was  reached  with  the  Japanese  Government 
according  to  which  Japanese  troops  were  not  to  encroach  west- 
ward of  the  Weihsien  station."  Japan  argued  however  that  her 
occupation  of  the  railway  was  not  a  violation  of  Chinese  neutral- 
ity, since  the  road  was  German  property  and  a  menace  to  her 
position  in  Kiaochao ;  she  justified  her  conquest  of  the  railway  by 
assimilating  its  status  with  that  of  the  leased  territory."^  As  the 
concession  for  the  railway  was  a  term  of  the  lease  and  in  view 
of  the  control  exercised  over  it  by  the  German  Government,  the 
railway  in  fact  was  a  projection  of  the  leased  area. 

Account  must  be  taken  of  two  subsequent  agreements,  one  of 
September  24,  1918,  between  China  and  Japan,  the  other  of  I\Iay 
20,  1921,  between  China  and  Germany. 

The  secret  agreement  of  1918  was  secured  by  Japan  as  an 
"adjustment  of  Questions  concerning  Shantung;"  it  contemplates 

"''Phillipson,  International  Law  and  the  Great  War  276. 
""United  States  Foreign  Relations  IQ04,  122. 
'"China  Year   Book   1921-2,  662. 
"'China  Year  Book  1921-2,  bcSo. 


LEGAL  PI-IASliS  Of  THE  SHANTUNG  QUESTION        392 

the  continuance  in  force  of  the  1915  agreement  and  disregards 
the  intervening  abrogation  declaration ;  except  for  the  last  article, 
in  which  Japan  promises  to  abolish  the  civil  administration  estab- 
lished Ijy  her  in  Shantung,  it  deals  entirely  with  the  Kiaochao- 
Tsinan'  or,  as  it  is  usually  called,  the  Shantung  Railway,  provid- 
ing for  its  policing  under  Japanese  regulation  and  for  the  em- 
ployment of  Chinese  citizens  on  its  administrative  stafif.  Article 
6  states  that  "The  Kiaochao-Tsinan  Railway,  after  its  ownership 
is  definitely  determined,  is  to  be  made  a  Chino-Japanese  joint  en- 
terprise."" China's  signature  to  this  arrangement  raises  the 
question  whether  it  is  an  admission  by  her  Government  of  the 
ineffectiveness  of  the  declaration  of  abrogation  as  applied  to  the 
Shantung  concessions. 

It  is  difficult  to  come  to  any  other  than  an  affirmative  con- 
clusion so  far  as  the  railway  is  concerned.  It  is  significant  that 
the  Chinese  Government,  on  the  same  day  it  entered  into  the 
agreement,  signed  another,  also  secret,  by  which,  in  return  for  a 
loan  of  20,000.000  yen,  it  gave  Japan  the  concession  for  build- 
ing two  branch  lines  for  the  Shantung  Railway.  The  time  of 
these  agreements,  within  two  months  of  the  armistice,  was  not 
one  likely  to  find  the  Powers  anxious  to  assure  themselves  of 
continued  Japanese  aid  by  an  open  support  of  these  new  demands. 
Had  China  revealed  them  and  requested  the  Powers  to  recognize 
iier  services  as  an  ally  by  using  their  good  offices  to  restrain  Japan 
it  would  seem  that  public  opinion  would  have  compelled  the  Pow- 
ers to  do  so.  At  least  it  might  well  have  prevented  Japan  from 
pressing  her  demands.  China's  delegates  at  the  Peace  Confer- 
ence would  have  been  in  a  much  stronger  position,  though  it  is 
doubtful  whether  the  final  decision  would  have  been  altered.  As 
it  happened,  when  the  agreements  of  1918  were  published  at 
Paris,  the  Chinese  delegation  felt  that  the  groimd  had  been  cut 
from  under  them  and  the  Ch-inese  people  united  in  bitter  crim- 
ination of  the  corrupt  officials  who  had  signed  the  agreements. 
It  seems  altogether  likely  that  the  compelling  cause  back  of  their 
signature  was  not  force  but  money."'     Plad  it  been  force  majeure, 

"'Same  702. 

""And  to  complete  the  chain  of  the  work  of  consohdation  she  (Japan) 
induced  China  last  year  when  Germany  was  collapsing  to  commit  her- 
self with  regard  to  the  disposal  of  the  Shantung  Railway  and  the  Kaomei 
Line.  Thus  an  open  avowal  was  obtained  from  China  as  to  her  suc- 
cession to  Germany's  rights  and  privileges  in  Shantimg.  in  part  and 
parcel   .    .    .   and  what  was  the  price  of  this  cession  nn   \hc  i\irt   of   those 


393  MINNESOTA    LAW   REVIEW 

the  agreement  to  let  the  Peace  Conference  decide  the  status  of 
the  raihvay  would  still  he  xalid. 

The  lease  itself  and  the  economic  privileges  not  specified  in 
the  agreements  of  19l8  remained  in  the  status  secured  by  the 
declaration  of  abrogation.  Although  the  Chinese  repudiation  of 
their  own  declaration  in  its  bearing  upon  the  railway,  the  principal 
asset  of  Shantiuig,  might  be  construed  as  raising  the  issue  of  its 
validity  in  toto,  strict  interpretation  would  maintain  it  in  all  mat- 
ters not  specifically  excepted. 

The  Chinese  Government  declined  to  sign  the  Treaty  of  Peace 
with  Germany.  The  non-settlement  of  the  Shantung  Question 
prior  to  the  Sino-German  Commercial  Agreement  of  May  20, 
1921,  led  the  Japanese  Government,  in  a  note  of  October  20,  1921, 
to  assert  that  in  it  Germany  took  the  Japanese  view,  that  the 
Treaty  of  \"ersailles  effected  the  transfer  of  the  German  rights 
and  interests  to  Japan,  and  that  China,  as  a  party  to  the  agree- 
ment, had  declared  herself  cognizant  of  the  transfer.""  The  Jap- 
anese assertion  was  based  upon  the  article  which  "affirms  that 
Germany  has  been  obliged  by  the  events  of  the  war  and  by  the 
Treaty  of  Versailles  to  renounce  all  the  rights,  interests  and  privil- 
eges which  she  acquired  by  virtue  of  the  Treaty  concluded  by  her 
on  March  6,  1898  and  other  Acts  concerning  the  Province  of  Shan- 
tung, and  finds  herself  deprived  of  the  possibility  of  restituting 
them  to  China."""  The  reply  of  the  Chinese  Government  is  an  ade- 
quate rebuttal  of  the  Japanese  contention  : 

"As  to  the  criticism  directed  to  the  declaration  made  by  the 
German  rei)resentatives  to  China,  it  is  to  be  observed  that  at  the 
time  when  they  came  to  negotiate  the  Commercial  Agreement 
with  China,  China  still  insisted  on  her  demand  for  the  restora- 
tion of  Kiaochao.  Rut,  owing  to  the  conditions  of  the  war  and 
the  Treaty  restraint,  Germany  lost,  by  force  majeure,  her  power 
of  returning  Kiaochao  to  China,  for  which  she  expressed  her  re- 
gret to  the  Chinese  Government.  To  this,  it  must  be  also  noted, 
the  Chinese  Government  has  only  declared  its  acknowledgment 
of  Germany's  explanation  as  such  and  no  more.""^ 

who  did  the  'joh'  it  might  be  asked?  It  was  the  pahry  sum  of  twenty 
million  Japanese  yen  which  supplied  the  government  with  funds  after 
August  10,  1918,  when  the  new  President  was  installed."  From  an 
article  by  Liang  Chi-Chao  on  "The  Causes  of  China's  Defeat  at  the 
Peace  Conference,"  in  9  Millard's  Review,  July  IQ,  1919,  262-3.  The 
20.000,000  yen  were  squandered  in  fruitless  military  operations;  Xorth 
(  hina  Herald,  Feb.  8,   1919,  322. 

"•'Peking  and  Tientsin  Times.  Oct.  21,   1921. 

""China  Year  Book  1921-2,  738. 

"'Peking  and  Tientsin  Times  Nov.  5,  1921. 


LEGAL  PHASES  OE  THE  SHANTUNG  QUESTION       394 

In  other  words  the  affirmation  in  the  Commercial  Agreement 
may  be  interpreted  only  as  a  mutual  recognition  by  China  and 
Germany  of  the  actual  dispossession  of  Germany  and  her  conse- 
quent inability  to  make  restitution,  without  prejudice  to  either 
country's  judgment  upon  the  legality  of  the  Versailles  decision. 

In  accordance  with  the  introductor}'  statement  of  intention 
this  argument  has  refrained  from  reference  to  the  considerations 
of  international  good  wall  and  good  morals  which  might  well 
have  restrained  Japan  from  the  Shantung  enterprise,  which  has 
brought  her  little  more  than  obloquy  and  increased  budgets.  The 
degree  to  which  Japanese  activities  in  Shantung  have  been  found 
legally  justifiable  is  an  indication  of  the  gap  that  still  separates 
law  and  ethics,  revealed  when  a  strong  power  deals  with  a  weaker 
one.  Nevertheless  China's  abrogation  declaration  is  upheld,  as 
it  would,  very  probably,  have  been  upheld  at  \^ersailles,  had  the 
Powers  possessed  freedom  of  action. 


75268 


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